Tesla lay off about 3,600 workers, cutting mostly salaried positions. Electric car maker Tesla Inc. told employees Tuesday that it will cut 9 percent of jobs as it slashes costs in the second half of the year.
As early as this year’s first-quarter earnings call, Elon Musk warned workers that the company was pledging a “thorough reorganization.”
Tesla has not revealed the money details that the layoffs would be saving but unveiled that the move will not affect factory workers as the company will continue the production of its semi, pickup truck and a new SUV in the coming years. Only employees from engineering, sales, and other front-office functions will be laid off.
“To be clear, Tesla will still continue to hire outstanding talent in critical roles as we move forward and there is still a significant need for additional production personnel,” Musk said in an email to employees. “I also want to emphasize that we are making this hard decision now so that we never have to do this again.”
For nearly all of its history, the company has not achieved a projected annual profit while investing greatly in manufacturing plants, technology, and an extensive car-charging network. But now it expects its Model 3 gross margins to be positive in Q2, Q3, and then Q4 of 2018.
“There is a normal ebb and flow of hiring and firing in a business,” he said. “Nine percent is a big chunk to do at once, but there comes a time when a company grows up and they have to cut out the fat to become more efficient.”